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Breathe new life into old books

3 Jul 2012 12:00 AM | Anonymous

In today’s ultra-competitive financial services market, many firms are looking at the role that ‘closed books’ can play as part of a wider business strategy for selling insurance policies and pensions. Although closing a book reduces marketing costs (as no new customers need to be acquired), administration costs will normally.In order to offset this expense, cross-selling additional products to existing members can be a great tactic. As consolidation continues to gather pace, insurers face a number of challenges (as well as opportunities) when it comes to selling additional products to members of closed books.

For example, although most financial services providers already allow their customers to increase their contributions if they choose to, this option tends to be buried in the small print somewhere. Firms that really want to sell this option need to make the opportunity to increase contributions much more visible as this is a straightforward way of generating revenue.

Offering follow-on products is another good way maximising the value of an existing book. For example, why not offer clients an income-bearing investment after a critical illness claim? Firms can also use this same approach to offer complementary products. Some have achieved great results by targeting people who have left their company pension scheme with the offer of health insurance, for instance.

After all, an important part of maximising the value of an existing book is customer retention and, more specifically, customer engagement: it’s vital to build loyalty so that another provider doesn’t lure valuable customers away. Firms need to redesign their interactions with customers and look for useful, creative ways to reinforce their client relationships, whether that means helping clients to manage multiple accounts more effectively or placing the occasional phone call in the name of customer service.

All of these different activities will need to be combined into a single joined-up strategy – encompassing not only the marketing, sales, and customer service departments, but also actuarial, finance and risk – in order to build an overall business strategy that promotes ‘intelligent’ customer retention. This approach is essential, as retention needs to be embedded at the very heart of the business: in management objectives, performance targets, reward schemes, core processes, management information and more.

With all of these different parties requiring involvement, product-to-market times clearly are considerably lengthened. In practice, all of this means that providers will need to review and alter their policy administration systems – or outsource to achieve the same effect. Solving this challenge – or outsourcing it to a specialist provider – is the key to getting cross-selling right, first time, every time. Bringing in a third party can create opportunities to consolidate, tidy up and cross-sell products in a cost-effective and efficient manner and breathe new life into old books.

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